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CAFA Law Blog Information, cases and insights regarding the Class Action Fairness Act of 2005

Attorney Apparently Fails to Learn how to Discern Advertising Bullsh*! in Law School

Posted in Case Summaries

Bank v. Hydra Group, LLC, No. 10–4085–cv., 2011 WL 4494380 (2d Cir. Sept. 29, 2011).

A California attorney, brought a putative class action against Hydra Group LLC, claiming that it sent him and others unsolicited commercial e-mail advertisements in violation of § 17529.5(a)(3) of the California Business & Professional Code. (Each night as I say my prayers I pray for peace in the Middle East and that all unsolicited emails and faxes will cease.)

Section 17529.5(a)(3) makes it unlawful for any person or entity to send a commercial e-mail advertisement from California or to a California e-mail address if the advertisement “has a subject line that a person knows would be likely to mislead a recipient, acting reasonably under the circumstances, about a material fact regarding the contents or subject matter of the message.” The plaintiff/attorney did not allege any injury to himself or any putative class member arising from the transmissions and sought as relief only liquidated damages as provided for in the statute.

Specifically, the plaintiff/attorney alleged that Hydra Group sent him three unsolicited advertisements by e-mail, with the subject lines all contained the phrase “ATTN: Your Auto Insurance Renewal Reminder,” but the bodies contained only advertisements for an auto insurance broker. The plaintiff/attorney alleged that his e-mail address was one of at least one million to which Hydra Group simultaneously sent each message. 

(Author Commentary which has nothing to do with the decision: So, to make this claim, the plaintiff/attorney had to allege that he and the rest of the plaintiff class were reasonably mislead by junk email that 99% of the population would delete in a second. Now, I am not saying it is OK for companies to send out misleading email, and some NON-LAWYERS could be misled, but come on.) 

Any who, the district court sua sponte dismissed the action for lack of subject-matter jurisdiction holding that even accepting the factual allegations in the complaint as true, the amount in controversy did not exceed $5 million as required by CAFA.

The plaintiff/attorney contended that class members would be entitled to liquidated damages of $3 billion-$1000 for each of the 3 million messages Hydra Group allegedly sent. 

The district court, however, stated that § 7529.5(b)(1)(B)(ii) limits liquidated damages to $1 million per “incident”; thus, even if Hydra Group executed the three alleged transmissions in violation of the statute, the recipients of the messages sent in those transmissions-whether one person or a million-were entitled to no more than $3 million in liquidated damages. While holding so, the district court disagreed with the plaintiff’s/attorney’s argument that the plain language of the statute limits to $1 million a particular plaintiff’s per-incident recovery, not a defendant’s per-incident liability, and concluded that such a strict reading was not a reasonable construction of the liability-limiting provision.

But wait, maybe I should not give the plaintiff/attorney such a hard time, he appealed, and the Second Circuit vacated the district court’s judgment and remanded the case for further proceeding.

The Second Circuit noted that the district court had found that the plaintiff’s/attorney’s putative class action did not satisfy the amount in controversy requirement of CAFA. CAFA, 28 U.S.C. § 1332(d)(2) requires a party seeking entrance to federal court to demonstrate that the aggregate amount in controversy exceeds $5 million, exclusive of interest and costs. Assuming that the general standards governing the amount of controversy requirement under 28 U.S.C. § 1332(a)(1) apply coextensively with those standards governing CAFA, the Second Circuit observed that dismissal is warranted on that basis only if it appears to a legal certainty that the claim is really for less than the jurisdictional amount.

Based on review of the plaintiff’s/attorney’s complaint, the Second Circuit held that it could not say with a “legal certainty” that the amount in controversy in his class action was less than $5 million. The Second Circuit maintained that where the damages sought are uncertain, the doubt should be resolved in favor of the plaintiff’s pleadings.  

So the plaintiff/attorney stayed alive. For the time being. But I already have some deposition questions in mind for him. “Are you telling me that, as a licensed attorney, you reasonably believed that this piece of paper was something more than advertising bullshi*!.”